If you are a young engineer aspiring to join the construction business in the Kingdom, you should know that the industry is not for the faint-hearted.

Your journey on the road to successful entrepreneurship will be fraught with adventures. The best way to dip your toes is to deeply study the market and devise a realistic plan with enough flexibility to adapt to unforeseen challenges that will surely come your way.

The smartest thing to do is learn from entrepreneurs who have made it and are thriving in the construction sector.

Here we have designed a brief step-by-step guide to starting your construction contract and subcontracting business in Saudi Arabia.

Needless to mention, the best time to start your contracting business in Saudi Arabia is now!

The sector is growing, and the potential for new entrants is limitless. But the lure of high potential is drawing many like you into the sector in the Kingdom. 

So, the atmosphere is characterized by intense competition. To become a part of this race, you must be fully aware of the game’s rules to ensure survival and growth.

How do I turn my vision of starting a construction industry into reality?

Establishing a successful contracting business depends on the extent to which young engineers like you are keen to understand the industry’s challenges. The more you know, the better you can develop a comprehensive and realistic plan of action which we have laid out here:

1. Defining the activity and developing an action plan:

First, it is necessary to determine the kind of activity that you think you can efficiently offer to the market.

The construction sector holds a massive labyrinth of services, for instance, engineering consulting – building roads and bridges – infrastructure – building residential and commercial complexes, etc.).

Draw a work plan that takes an essential service you can provide and build a go-to market strategy around it. The key elements of which are summarized as follows:

  • Analysis of the particular service/services in the construction sector
  • Risk assessment
  • A marketing plan
  • Selling strategy
  • Building a functional structure

Put your research on the SWOT analysis matrix that addresses four main points facing any business: 

  • Strengths 
  • Weaknesses 
  • Opportunities 
  • Threats

It will help you in the process of making sound decisions and avoid any failures or pitfalls in the future.

2. Market Study

Achieve a deeper understanding of customer needs and the size of supply and demand, identify suppliers of equipment, raw materials, and services of all kinds, and study competitors and whether there are gaps in their services being provided – try to bridge those gaps and provide a better service.

3. Determine Funding Sources

Gathering finances is the key. To fund the business’s operational needs, you must first be limited to purchasing or renting equipment and devices, employees’ salaries and insurance, and unexpected events that may come along the way. Therefore, you should be aware of the appropriate financing sources and make the most of them. These sources are often limited to the following:

  • Personal Financing
  • Investment Capital
  • Foreign Investor
  • Bank loans

Also, keep an eye on the kingdom’s focused interest and support for young entrepreneurs. As the government recently announced the establishment of the Small and Medium Enterprises Bank, one of the strongest financing initiatives in the Kingdom’s history, it is expected to become a major pillar in the national policy for financing new enterprises.

4. Building staff and human resources

Building a work team of experts in the construction and building industry, including engineers, technicians, and workers, is a constant challenge because good human resources are difficult to find in a competitive environment. But an efficient team is the cornerstone of any business. Finding the right people for the right role is the only way to surge ahead in the industry.

5. Choosing office space for your business

The choice of the business’ official address depends on the ability of the entrepreneur. It is often advised and preferred to start from small offices or co-working spaces, business accelerators, and even incubators. Still, in all cases, the business’s headquarters must be in a location that is easy for customers to reach without difficulty, Examining the surrounding environment if it has other competitors.

6. Marketing plan

The advertising strategy plays a pivotal role in reaching most potential customers. In light of the technological accessibility and progress in communication and digital marketing, various options emerge, all of which are in the interest of the business. These means are:

  • Building a website for the facility is essential and must be addressed.
  • Marketing by advertising in search engines.
  • Marketing in social media.
  • Advertisements.
  • Launching email campaigns.
  • Content marketing is the most widespread.

7. Adopting smart and practical solutions to reduce costs

Develop a remote work strategy. Using remote workers effectively reduces the costs and burdens of high salaries, especially at the initial stage of the business. In addition, there will be no need to provide a physical work environment, purchase the necessary devices and equipment, or resort to training courses from time to time. Find the best talent and employ them from wherever they can be digitally present.

Remote work is becoming an industry-wide norm. Platforms are available that facilitate employees’ access to complete information about projects and distribute tasks to the work team while monitoring their productivity rates efficiently and accurately.

Requirements for launching a contracting facility in the Kingdom

The Kingdom has set a package of conditions to launch a contracting facility, which aims to organize work in the sector, and applicants must fulfill these conditions, which are limited to:

  • The applicant obtains a license to work in the contracting field and pays the license fees.
  • A business address that fulfills the local municipality’s standards should contain the title deed or a lease contract of that address.
  • The receipt of the subscription payment to the Chamber of Commerce.
  • The applicant must be at least 18 years old, of good conduct, and has not been convicted of any crime or sentenced.
  • Create a tax file and obtain a tax card from the “ZATCA“.

Official documents to be submitted to the concerned authorities:

  • Title deed or lease of the business premises
  • Family card or identity card and a copy thereof
  • Payment receipt of the license fee.
  • Payment receipt of the  subscription fees of Saudi Chamber of Commerce
  • Zakat certificate and the original income certificate for viewing, and a copy thereof
  • The original work certificate for review and a copy thereof
  • The municipality’s permit to have a permanent headquarters for the facility with the licenses issued by the competent authorities
  • The document and a copy shall be attached for viewing in submitting a power of attorney.
  • If the applicant is a woman, a legal power of attorney for a Saudi citizen, who is not an employee in the government sector, must be attached.
  • A certificate from the educational authorities must be attached if the applicant is still a student.

You can complete the process online through the recently established “Meras” platform. Provided all the documents mentioned above are present and the conditions are met – the platform provides free services upon registration through it and enables you to start as a contractor right away!

How can I document my financial transactions with government agencies without bureaucratic complications?

In January 2018, the government launched “Etimad”, a platform for digital contracting and electronic signature, which provides an array of services to the private and government sectors as well as to individuals. The platform aims to make financial transactions with government agencies hassle-free and transparent for users.

Etimad contributes to facilitating services and procedures through:

  • Quick completion of services and financial transactions with high control and quality.
  • Enabling users to request for bank guarantees electronically, while taking advantage of the value offered by local and international banks for the bank guarantee service.
  • Enabling the private sector to submit financial claims related to their projects from government agencies, routing through electronic payment and disbursement orders through the payment management service.

How can I land my first construction project as a contractor? I fulfilled the conditions, completed all government requirements, and obtained a contractor’s license, but do not know where to start. 

It’s simple.

All you have to do is keep a tab on tenders and bids, which you can find on the portal.

The platform adopts the principle of transparency between government agencies on the one hand and service providers on the other, and enables the issuance of tenders, receiving invitations, purchasing tender documents, examining offers and awarding contracts with complete impartiality, and transparency. 

It is recommended that you subscribe to the “supplier registration” service available to all companies and institutions. it will help you to stay informed about the latest developments regarding tenders and your competitors vying for contracts.  

You can also view the tenders offered through websites like Markaz, in addition to apps like Monaqsat (https://plus.monaqsat.com/)

As a subcontractor, how can I build relationships with the major contracting companies that I aspire to work with?

In order to become a building subcontractor, you must first earn the confidence of major contracting companies that you seek to work with, through:

  • Documenting your projects and achievements that you have completed accurately and within the scheduled time frame, with the skill and efficiency witnessed by previous contractors.
  • Your focus on a specific specialization enhances the opportunity to present a high-quality project while marketing yourself as a specialist in the field.
  • Keep abreast of the latest construction technologies, the technology of the construction industry is constantly evolving, and your familiarity with everything new shows your ability to work efficiently and enhances your chances of getting work from the desired companies.
  • Develop a plan to promote and market your services by creating advertising content and business cards, while presenting your services to contracting companies and mega-project owners on your target list.

International Trade & Business graduate

عبدالبديع ترجمان
محلل أعمال مهتم بالشركات الناشئة التي تقود التحول الرقمي في المملكة العربية السعودية ومنطقة الشرق الأوسط.

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